Tuesday, March 1, 2011

Modern Feudalism part 2: Ideology and Tithes

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."

~ Thomas Jefferson

In the last article, we briefly discussed the profound control money exerts over our lives, and explored how the Federal Reserve System makes it necessary that there are always some people who fail to pay back their loans. Also mentioned was the inflation inherent in this system. Today we're going to discuss the political effects of this system, the way it is similar and differs to chattel slavery and feudalism, and explore some of the detrimental effects it has for those who aren't benefiting from it.

Now, as I mentioned, when all the money that exists is created for loans that must be paid back at interest, it's automatically going to happen that some people will default. One of the major divides of political outlook in America between the 'Left' and the 'Right,' particularly among the middle and upper classes, involves how downtrodden people are viewed. Rightists tend to hold the perspective that these people's station in society is reflective of their ineptitude and unfitness, as well as perhaps their laziness, while leftists see them as being 'down on their luck' or trapped in a cycle of poverty. Both sides in American politics see their situation as a natural consequence of human nature playing out, however.

What if it's not human nature, though? What if their situation is something that results automatically from the monetary system? Well, we should do something about that, right?

If you ask the right, we need to make things easier for businesses so that they can employ more people. This won't solve the fundamental problem, because someone's still going to have to pay their loans, and some people still won't be able to. Employment rates would rise, but wages would ultimately go down as the money would have to be spread out if held at a constant supply to avoid inflation. The left's view tends to be that we need to have more government funding for social programs. This does solve the problem in a way - essentially, the government assumes the debt of defaulters, but it creates inflation, and with the same system in place people are going to need even more funding social programs later. In the meantime, the national debt figure (currently rising over $14 trillion) erodes our nation's international reputation, making it so that we have to make more and more money to get the same amount of goods in trade.

Neither of these parties solve the problem at its root by re-asserting the constitutional power of Congress itself to issue currency and regulate its value. To understand this, we have to see who benefits from the system being the way it is.

If you're an issuer of loans at no cost to yourself, for which you get paid interest, you benefit from this system. As the amount of loans made increases and time passes, the percentage of the money supply owed as interest increases. So banks certainly benefit from this arrangement. Not the low-level employees, who have to live immersed in a worsening economy, but those who make orders of magnitude more money than they. Most large companies, including large media conglomerates, funded by bank loans have a similar disparity in salary between those doing the work and those high on the corporate ladder. These people tend also to be the ones who provide the most financial support to candidates on both sides of the 'aisle'.

In America, the candidate who gets more than half of the votes wins the race for most offices, so there is a natural incentive against a multiparty system. Instead, the notion that our nation is a democracy is preserved by two parties with exactly the same fundamental economic policies (perpetuate scarcity) that argue about how we should pretend to fix scarcity when times are tough, and argue about intentionally divisive issues of personal choice and preference when times are good. People get swept up in opposing whichever argument they see as less likely to work (so often we're told to vote for the lesser of two evils), and this of course stimulates the other side, which sees the "solutions" ours is offering as another way of perpetuating the problem. So the bipartisan system keeps churning on, running on enantiodromia, and genuine solutions get ignored.

An entire elaborate system of control is established as a consequence of our monetary system. Because of artificial scarcity and frivolous consumer products, almost no one, particularly those with incomes in the bottom 90%, has enough money to buy a house. Of course, almost no one does. Instead, you get a mortgage, increasing the total interest owed to those on top and giving yourself more incentive to perpetuate the system as it is. Lots of people go to college, but many don't have the money to pay for it, so they take student loans, the equivalent to an oath of fealty in the modern age. This is all justified because we rely on the system as it is, simply because there isn't another one around that exists, and no one who gets heard on a very massive scale suggests one.

For those on top, this system is better than slavery ever was in the American South. In that system, the lord of the manor had to provide food and shelter for those bound to him. Now we have a much more convenient system for those in charge, where we work our own asses off providing ourselves and our families with these things. It's also better for the ruling class than medieval feudalism was. Admittedly, that was a pretty sweet deal, but in that situation a peasant revolt still knew who to lynch. Now the responsibility is so distributed throughout society that we have become our own jailers and taskmasters.

Before I finish, I'd like to say something about the tax sandwich that comes with this system. As I mentioned in the last post on this subject, inflation basically functions as a hidden tax. Even if the government doesn't raise taxes when it spends more, that act of spending makes your money worth less than it already is. But while all of this inflation goes on, the income tax brackets remain exactly the same. This is a second way to surreptitiously increase the amount of value removed from the money the average citizen earns.

Finally, a fact you probably didn't know. The government does not spend the money it skims off of your wages through the income tax. No, that money is required by law to go directly toward paying the interest on the national debt. So it goes directly into the hands of the people with the most interest in perpetuating this system. If you weren't angry before, you probably are now. How about a relaxation exercise?

In my next post on this subject, I'll suggest an alternative to the Federal Reserve System that removes some of its glaring flaws while keeping the general fiat money structure, and helping environmentalism in the meantime.